SR 03-09-2021 3B
City Council Report
City Council Meeting: March 9, 2021
Agenda Item: 3.B
1 of 4
To: Mayor and City Council
From: David Martin, Director, Administration
Subject: Approval of Third Amendment to Parking Lease Agreement with Macerich
Recommended Action
Staff recommends that the Council authorize the City Manager to enter into a Third
Amendment to Agreement for the Lease, Operations and Maintenance of Parking
Facilities with Macerich SMP LP in order to:
(1) Authorize Macerich to negotiate and enter into short-term license agreements,
subject to City approval, to permit pop-up activities at Parking Structures 7 and 8
over the next 18 months; and,
(2) Approve the installation of six (6) new electrical vehicle Tesla superchargers at
Parking Structure 7 on Level 5.
Summary
The City has a longstanding public private partnership that spans over 40 years with the
owner/operators of Santa Monica Place. Through the Agreement for the Lease,
Operations and Maintenance of Parking Facilities (the Lease Agreement) with the City,
The Macerich Company (Macerich), the current owner/operator of Santa Monica Place
utilizes the parking spaces at Parking Structure 7 and 8 (PS 7 & 8). To help support the
City’s mobility and economic recovery goals, and Santa Monica Place’s ongoing viability
as a destination location, Macerich proposes (1) to temporarily activate and convert
underutilized parking spaces in order to support pop-up business operations such as
outdoor fitness classes and generate additional revenue through short-term license
agreements and (2) to install additional Tesla Superchargers in Parking Structure 7 to
expand the electric charging options in the downtown. In accordance with the Lease
Agreement, Council must consent to a Third Amendment to the Lease Agreement to
allow Macerich to enter into short-term license agreements tied to the City’s emergency
orders for a period of 18 months and for the installation of additional electrical vehicle
charging stations.
3.B
Packet Pg. 17
2 of 4
Discussion
From time to time, as needed, the City and Macerich have entered into amendments to
the Lease Agreement to reflect changes in operations or investments in capital
improvements. Specifically, the City executed three separate agreements (Agreements
#9097, #9115, #9185) with Macerich in 2009 and 2010 for the completion and funding
of the first phase of design for certain improvements to PS 7 & 8 including construction
management services. In July 2010, the former Redevelopment Agency of the City of
Santa Monica entered into the current Agreement for the Lease, Operations and
Maintenance of Parking Facilities (Agreement #2188/10740) with Macerich which sets
forth specific terms and requirements to share in the expenses and revenues connected
to the operation and maintenance of PS 7 & 8.
Proposed Short-Term License Agreements of PS 7 & 8
The economic impacts of the pandemic are significant. With the Los Angeles County
Department of Health Safer at Home Orders, the number of visitors and shoppers to the
City’s downtown has precipitously declined. This is evidenced through lower pedestrian
foot counts and decreased parking occupancies. While parking occupancies are down
in PS 7 & 8 due to the temporary impacts of COVID, such as closed indoor dining and
movie theaters, and the closure of the adjacent County Court system, overall these
facilities continue to receive higher use than some of the other Downtown parking
structures due to their proximity to the beach. While capacity exists to accommodate
temporary non-parking uses, such as the indicated outdoor fitness classes, it is noted
that as adjacent venues return to full services, parking will need to be restored. Efforts
to safely stimulate and activate commerce and tourism are vital to the survival of the
Downtown and the Santa Monica Place. The activation of PS 7 & 8 through short-term
license agreements with third parties is one such investment in a broader campaign to
spur economic recovery and adapt to evolving consumer needs and expectations.
These efforts are in tandem with the City’s Economic Recovery Task Force and
temporary use of property permit approvals. Additionally, these agreements will
generate additional revenue during the emergency orders while providing outdoor space
3.B
Packet Pg. 18
3 of 4
to businesses that are unable to utilize their indoor spaces due to current COVID-19
Safer at Home Orders
Macerich would be responsible for securing all necessary approvals and permits,
including any approvals from the California Coastal Commission for the temporary use
of parking for alternative use. City staff will review and approve proposed license
agreements prior to execution, which includes negotiated revenues. Any additional
revenues derived from the temporary pop-up business operations will be subject to the
revenue sharing provisions outlined in the Waterfall Agreement. The Third Amendment
of the Agreement would address the apportionment of credit card costs and other
shared costs incurred by the City of Santa Monica, which would need to be distributed
equally in accordance with the Waterfall Agreement.
Additional Tesla EV Superchargers
The installation of additional electric vehicle chargers would be an added amenity to
Santa Monica Place and Downtown Santa Monica. Macerich proposes to enter into an
agreement with Tesla to facilitate the installation of six (6) new electric vehicle (EV)
superchargers located within PS 7. With the addition of these new EV chargers, PS 7
would provide a total of sixteen (16) EV charging stations for the general public. The
license agreement would require Tesla to pay for all electricity costs associated with the
superchargers.
Installation and maintenance of the Tesla EV Superchargers will be the responsibility of
Macerich and Tesla. Tesla will not pay rent to either the City or Macerich for the use of
these parking spaces, however vehicles in these spaces will be subject to standard
public parking rates. There is no cost to the City. Parking revenues will not be impacted
as the public parking rates would continue to apply and the parking spaces would
remain available to the public.
3.B
Packet Pg. 19
4 of 4
Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary as a result of the
recommended actions. Staff will return to Council if specific budget actions are required
in the future. Any short-term license agreements negotiated between Macerich and a
third party are subject to the City’s existing waterfall agreement including the revenue
sharing provisions. Revenues will be deposited in account 01600004.403220.
Prepared By: Natalie Verlinich, Senior Development Analyst
Approved
Forwarded to Council
3.B
Packet Pg. 20